Is supplier consolidation the best policy?

The practice of supplier rationalisation in which spend is concentrated with fewer, larger suppliers has been called into question.

Paul Bestford, CPO at the John Lewis Partnership (JLP), said this approach was common in the procurement world but he queried whether the strategic relationships with suppliers that resulted allowed for innovation.

Speaking at the CIPS Annual Conference in London, Bestford said he was more concerned with the level of fluidity in JLP’s supply base rather than its size, which happens to be about 5,500 suppliers.

“The question we should be asking is: ‘How much movement is there in that base? Are we working with the same suppliers and are we stopping ourselves tapping into innovation?’” he said.

“The most important thing is to remove some of the pressure that would stop us introducing innovation into the base.”

During a panel discussion on innovation, Gareth Nugent, senior director international procurement for the Discovery Network, said working with innovative start-ups was central to their strategy of moving away from selling their programmes to traditional TV platforms and adopting a business-to-consumer model.

“We absolutely need those start-up businesses. They are the ones who can work with us to generate new revenue streams,” he said.

Echoing the sentiment of the panel, Nugent said Discovery Network would flex rules to work with SMEs that might not have the track record of more established firms.

“If we think this is a company that can help us move forward, we will flex the rules to accommodate that,” he said.

Bestford said: “We need to make it easier for companies to come to us.”

Margaret Gibson, head of procurement at Clydesdale Bank, said they checked all marketing emails for innovative firms.

“We have a mantra: if you send us a cold-call email we will respond to that. We might find a gold nugget.”